Foldables Are Too Expensive To Make A Profit: Huawei CEO

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Having launched its second-generation foldable, the Mate Xs, Huawei says that foldables are too expensive to make a profit.

Foldables too expensive for profit, Huawei exec says

Huawei CEO Yu Chengdong says this, even as his company has just launched the Mate Xs and the first-generation Mate X. The company is diving into foldables. With Yu's statement about foldables not churning profit, it seems that Huawei is in foldables for reasons other than making money.

What are those reasons?

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Reputation

Huawei wants to remain at the cutting edge of the smartphone market. Foldables are indeed, cutting-edge. They are the newest trend. Motorola has launched the Motorola Razr (2019). The device folds in half and comes in a compact form factor.

Samsung has launched the Galaxy Fold last year. This year, it has already announced the Galaxy Z Flip, a phone that is more competitive with the Motorola Razr foldable buyer base. Royole, a lesser-known manufacturer, has also launched its FlexPai foldable phone. The company just announced its FlexPai 2 this week.

Motorola, Samsung, and FlexPai are in the foldable phone race. Huawei wants to be in the foldable race because of reputation and market perception.

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In a field where companies compete to be more cutting-edge than their rivals, it pays to stay ahead. Huawei cannot compete in the phone market if it can't at least try to rival Samsung, whose popularity is indisputable in Android.

This is evident when one considers that Samsung rushed its first-generation Galaxy Fold to market so as to beat Huawei to launch. Then-Samsung CEO D.J. Koh said at the time that it didn't want Huawei to get to market before it could. The reason? Reputation. Companies that come behind are "Johnny-come-lately."

"Me Too"

Apart from reputation, it could be the case that Shenzhen's Pride is making cutting-edge phones because of the "me too" mindset. The "me too" mindset in the mobile market with OEMs is, "Well, we don't know why we're making a phone, but that's what other OEM(s) are doing."

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Some may think this is too critical a view of Huawei, but there's some evidence for the position.

This is the same company whose rotating CEO said in a statement that Huawei didn't see a legitimate reason for the smartwatch's existence. "I am always confused as to what smartwatches are for when we have smartphones," rotating CEO Eric Xu Zhijun said back in 2017.

The question becomes, then, why would Huawei make smartwatches if it doesn't see a purpose for them? Profit, reputation, and the "me too" mindset.

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Huawei doesn't want to remain outside of the futuristic phone discussion. The only way an Android OEM remains in the discussion is to produce at least one foldable phone. Huawei currently has two on the market, so the company remains at the top for now.